Cash App’s Bitcoin Revenue Reached $306 Million in First Quarter

Square disclosed on May 6, 2020 that customers bought $306.098 million of bitcoin through Cash App during the three months ended March 31, 2020. That was $240.570 million, or 367%, above the $65.528 million reported for the same quarter of 2019.

The result made bitcoin the largest revenue component inside Cash App for the quarter. Square's shareholder letter divided Cash App's $528 million of first-quarter revenue into $306 million from bitcoin and $222 million from subscription, services and transaction-based activity. On those rounded figures, bitcoin represented about 58% of Cash App revenue. That percentage is a Coinburn calculation, not a company-reported performance measure.

A large sales line with a thin margin

The headline number needs an accounting qualifier. Square recorded the full amount of bitcoin sold to customers as revenue and recorded the bitcoin it purchased to facilitate those sales as cost of revenue. Its Form 10-Q listed $299.426 million of bitcoin costs for the quarter. Subtracting that cost from $306.098 million of revenue produces $6.672 million of gross profit, consistent with the shareholder letter's rounded $7 million figure.

That distinction was central to interpreting the report on May 6, 2020. Bitcoin supplied most of Cash App's revenue but only about 3.8% of its $183 million in gross profit, using the letter's rounded segment figures. Cash App's other activities generated $176 million of gross profit on $222 million of revenue. Revenue therefore measured customer bitcoin purchase volume plus Square's small margin; it was not equivalent to fees, profit, corporate bitcoin holdings or a proprietary trading gain.

Square itself said it deducted bitcoin revenue from certain adjusted presentations because its role was to facilitate access and because it applied only a small margin to a volatile market cost. The filing also warned that recognized bitcoin revenue would fluctuate with both market-price volatility and customer demand.

Demand during a disrupted quarter

The company attributed the year-over-year increase to more active bitcoin customers and stronger customer demand. Its shareholder letter added that demand benefited from the decline in bitcoin's price during the quarter. Those are Square's contemporaneous explanations, not independently verified user counts: the company did not disclose the number of active bitcoin customers or the quantity of bitcoin purchased through Cash App for the quarter.

The contrast with Square's seller business sharpened the institutional significance. Square said transaction-based revenue materially decelerated during the last two weeks of March as the COVID-19 outbreak and shelter-in-place orders hit in-person commerce. Cash App, by comparison, remained a consumer distribution channel through which a public U.S. payments company offered fractional bitcoin access alongside peer-to-peer payments, cards and deposits.

The disclosure did not establish that bitcoin had become a high-margin business for Square. It established something narrower and verifiable: during the January 1–March 31, 2020 reporting window, retail bitcoin purchases routed through Cash App had become large enough to exceed all of the app's other revenue categories combined.

What May 6 established

For the market on May 6, 2020, the record was an adoption and distribution signal rather than an earnings windfall. A mainstream mobile-finance product had processed a record dollar amount of customer bitcoin purchases while generating a modest spread. The result showed scale at a regulated public company, but the surviving disclosures cannot reveal unique buyers, coins purchased, average ticket size, repeat activity or net flows. Those limits matter: $306.098 million describes gross sales recognized under Square's accounting, not new money entering bitcoin or bitcoin removed from exchanges.